Insurers' income swells as hospitals, docs lower prices

Insurers say successful negotiations with health care providers to reduce reimbursement prices boosted bottom lines for the most recent quarter. They also say diminished demand from patients, due to the weak economy, is helping to brighten health plans’ financial pictures.

Blue Cross and Blue Shield of Massachusetts, Inc. and Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc. reported combined net income of $56.5 million on revenue of $1.6 billion for the second quarter of 2011, compared with a net loss of $14.3 million, on the same revenue, in the year-ago period. Claims declined slightly to $1.4 billion from $1.5 billion in the second quarter of 2011 versus the same period last year.

“We’re committed to working with physicians and hospitals in a spirit of shared responsibility to reach contract agreements that allow caregivers to cover their reasonable costs while also meeting the community’s expectations about affordability,” BSBCMA CFO Allen Maltz said in a statement.

Maltz said individual and small business customers renewing in the fourth quarter of this year will see average base rate increases of less than 7.5 percent. However, rates can include up to an additional 15 percent due to demographic factors, such as the age of workers. Blue Cross reported it had 2.8 million members as of June 30, 2011.

Harvard Pilgrim Health Care reported net income of $13.5 million on revenue of $696.3 million for the second quarter of 2011, versus net income of $6.5 million on revenue of $735.6 for the corresponding period last year. Harvard Pilgrim also credited a moderation in health care provider prices, along with lower utilization, for the gains.

“Much of Harvard Pilgrim’s favorable result is due to a series of provider and consumer cost-containment programs that modify behavior in the areas of inefficient or unnecessary medical services, as well as ongoing efforts to control administrative costs,” Harvard Pilgrim CFO James DuCharme, said in a statement. “In addition, the weakened economy continues the industry trend of reduced utilization of discretionary medical services.”

As of June 30, 2011, total membership for Harvard Pilgrim was 1,155,000.

Tufts Health Plan reported that its net income grew to $35.9 million for the second quarter of 2011, up from net income of $11.5 million in the year-ago period. Tufts executives said the health plan is seeing increased adoption of tiered health plans that provide incentives for patients to choose lower cost health care providers.

“We continue to invest in and strengthen our core business by launching the “Your Choice” suite of tiered products, a central element of our Coordinated Care Model (CCM) strategy,” Tufts CFO Umesh Kurpad said in a statement. “Quite simply, this model is based on our belief that to improve health care quality and reduce escalating health care costs, we must appropriately align incentives for our members and network providers, and support effective decision making by both parties.”

Tufts Health Plan’s membership was 756,843 at the end of the quarter.

The state’s fourth largest insurer, Fallon Community Health Plan, also reported that its finances improved year over year. FCHP reported net income of $13.6 million on revenue of $289 million for the second quarter. For the same quarter last year, FCHP posted a net loss of $12.8 million on revenue of $283.8 mihttp://www.blogger.com/img/blank.gifllion. Membership was 207,791 as of June 30, 2011.

In addition to Blue Cross's average increases of less than 7.5 percent for business customers, the other insurers said their average increases would be:

• At Harvard Pilgrim, a 3-to-5.9 percent average increase.

• At Tufts, a 5.9 percent average increase.

• At Fallon, a 5.3-to-5.4 percent average increase.

source

note: all reported increases exceed the rate of inflation.